For me it was simple; a 3-month consulting gig will give me a financial runway for the next year. So I am doing it, and nothing else. Come December 1st I will have enough to live comfortably for the next year, probably 2 years if I move to somewhere cheaper and bring my fiancee over.
'mahmud, this isn't particle surgery. This is every real consultancy. Ever.
It doesn't take a very savvy client to notice when throughput drops by a factor of 10. So unless you're a body shop that's already sending out mystery devs, or you're very good at explaining away a huge drop in productivity, hiring is not going to help this situation at all.
Somethings are best done by yourself.
And yes, Paul was right; I barely have any mind for our startup anymore. I live and dream the consulting gig; it monopolizes my imagination, and all I can do after a grueling 12 hour day of work is watch Family Guy and drink beer in bed like a bum.
We started talking to investors, and the first thing they said was "We won't consider you if you keep the consulting business, shut it down."
So the company shut down the consulting business. This meant that we were now on the clock.
The investors then waited until we were just about to go under and offered us a bridge loan....on their terms. No negotiating power.
Then finally, they closed the first round of VC.
Needless to say the company capitulated on all the terms of the term sheet for that first round.
Later, it turned out that we were ahead of the market by about 5 years.
So, the company failed because they listened to investors who gave them bad advice. The advice was useful for getting better terms for the investors.
Now, what would have happened if they had not shut down the consultancy-- they could have negotiated good terms, and wouldn't have needed a bridge loan, and they could have hung on until the market took off. Might have been a delayed payoff for the investors, but 7-8 years is not that long to wait to get a home run, especially compared to the complete loss alternative.
IF the investors had invested what they did without the requirement to shut down the consultancy, then the company could have added the employees they wanted to, and had both the investment and the profits from the consultancy to invest in the primary product.
The end result would have been a better primary product and a better return for the investors.
Blanket advice is generally not good advice. Don't run a SEO consultancy when your primary product is videogames. But if you're primary product is videogames and you can fund much of your overhead with a few employees and a licensing deal for that engine, then it is a good thing. It is easy to tell if it makes sense if the income more than covers the cost of the employees dedicated to the "side" business. And reality is, this side business will often present opportunities or your main business and generally underwrite advancement of the main product on someone else's dime.
If you're a couple college kids and this is your first startup, then maybe you're not able to keep focus on the main business when you have customers for a consultancy.
But when they are aligned and the consultancy covers hiring extra manpower so that more total effort goes into the main business, then giving up the consultancy would be a bad advice.
So, if you can do a similar split with time-- where you spend 4 months consulting to cover expenses for 12 months, then you're in a position analogous to this company. In that case, it makes total sense and the advice to "never do consulting" is bad advice.
You'll be better off in your TC application or any other aspect of your business having those 8 months of free time to just work on the product... because you consulted for 4 months.
The alternative is likely keeping a day job the whole 12 months and not being able to focus on the startup.
* I treat each of my own projects just like a regular client
* I consider all the projects like a 'scrum' of 'scrums' (ie: I get to prioritize between projects just like I prioritize inside a given project)
* for billable and non-billable projects, I take great care to ensure I keep a sustainable rhythm (I work a lot periodically when required, but not on the long run)
* I keep track of my 'pulse' with Freckle, very helpful
* for each project (home-made or not) I try hard to limit the amount of time I dedicate to it
* I keep high rates
* we've lowered our expenses quite far (including moving to a very cheap area in France, considering buying a house without a mortgage as a result etc)
In my case and when it's in control, consulting is both a risk-splitter and a great way to keep up to date and financially 'confident'.
As well I get to work in various, real-world situations that give me ideas for my own projects.
Last point: as I consider myself an investor investing in ourselves, where my resources (time/money/energy) are scarce, I find it great and sustainable to work this way, slowly building what I like.
http://news.ycombinator.com/item?id=1604820 (techniques to prioritize between projects and inside a project)
For me, trying to schedule "startup time" didn't work. There was always too much immediate consulting-type work to take care of.
So about a year ago I ran a Craigslist ad, spent a day wading through applications and making phone calls, and found someone that was willing to work on a part-time, on-call basis, for good wages but less than my consulting fees.
A year later, I've got a couple of people that I work with now -- sort-of employees-on-call -- and I was just able to take my first real vacation in 2.5 years. Everything was handled fine while I was unreachable. So now I've got plenty of time to work on software.
So, one solution is to run your consulting like a business for a while, grow it, get some contract help, stabilize it, and then manage it part-time.
The bottom line is keep moving forward, and eventually you'll exit the workload brackish and emerge on the other end full-time on your startup.
I'm 100% bootstrapped and I'm going full-time on my startup November 1st - until then, babysteps shall continue!
A higher hourly rate isn't always the best answer. Some clients require more managing than others, have poorly organized projects, or terrible schedule requirements. Any of these will destroy your ability to run a startup just as much as going broke. Pick clients that result in a low overhead for you.
I've cut my client list down from a dozen or so to just 2 big clients. One pays me a high dollar rate and is the sort of client who just shoots me an email saying, "hey can you spend 6 hours on this thing". The other is a long term project which is basically guaranteed work for the next 12 months or more. This is lower paying, but provides 20-40 hours a month of consistent work. Both clients are low maintenance, easy to deal with and flexible.
For me, it doesn't matter how big the hourly rate is if I'm getting hassled every day of the week. It's as much about your time as it about your income.
Good customers, you explain your situation, raise your rates, but offer grandfather clauses if they're willing to guarantee some level of minimum work or pay upfront or with better terms. Bad customers, you double your rates overnight (and then do it again 3 months later). In between customers, you offer different packages that trade off them paying you more with them paying you more reliably, and/or offering you things that help you market your offerings better (referrals, testimonials, etc).
Additionally you specialize. If its something you don't like doing, you charge more. If its something that teaches you a skill that you can use for your nascent startup, you charge less.
Eventually if you're good, your "startup" becomes the R&D department to your burgeoning consulting business, and you've got something that feeds good things back and forth. The startup makes consulting more viable, and the consulting makes the startup more viable. Somewhere along the way you hire people.
I love the variety of consulting so much that even after my ventures bring success I will still want to do consulting because it gives me that instant achievement satisfaction.
Don't focus on breaking free from consulting and before working on any other ideas get that first product released. Set milestones and treat it like your other work.
I'm still consulting until I get my own projects off the ground, my first launch took 1.5 years to finish, my next launch will be in a fraction of the time.
So I did a substantial 7-month consulting gig last year, collected the cash and have been working on my startup since.
Incidental details: 1. I blew two months on a startup idea that was going nowhere. 2. I live cheaply.
2. Pick or find consulting work that "scales well" meaning it allows you to leverage (sorry for jargon) knowledge/things you've already done or built. This type of work will be more efficient for you, more profitable and you can reinvest saved time into your startup.
3. Regarding multiple startup ideas, I'd pick one to focus on. Diversifying amongst startup ideas esp if unrelated doesn't work in my experience. It leads to doing them all half-baked which ultimately won't get you further from consulting which is where you want to be.
4. As mentioned below, we treated our own company as a client which meant we acted with same sense of urgency as we would with other clients. It is a good way to make your own venture a priority else it always gets back burnered.
5. This one is a bit drastic but exit the mortgage if you can by selling your home and renting. Fixed costs like mortgages can be like anchors for an entrepreneur. Take the money you may make and put some away for a rainy day fund for the wife/kids/you and a portion can be used to give your own venture some additional fuel or runway.
In same boat as you my friend so "feel your pain" although sounds like you have too much consulting biz which is a high class problem IMO.
Good luck. And if you figure out a "solution", pls let me know.
Plus why invest in real estate (highly uncertain and perhaps going nowhere in near future) vs. invest in oneself?
He said something like "resources are allocated by customers not managers, so choose your first customers carefully".
The point is if your customers are for your consulting business they will allocate your resources in that direction.
Thus the solution is simple, at least in theory: make money. Now.
1) Confine your contract time. I try to basically do contract work between 8am and 1pm. Other people only work on certain days.
2) Work with your clients to set priorities. Know what are the most important things to them, and tackle those first. This helps with....
3) Work a fixed number of hours. Don't do overtime. If you stay organized, estimate well, and stay on task, you can do your job and then stop.
4) Whoever else said to launch, I second this. You need someone yelling at you to get your startup shit done. Customers are very good at this job.
I guess my problem is also really because I'm a one-man startup. So finding a co-founder or startup team to help me on the startup side could solve my problem. Or it might be another problem too...
... guess this might be an "Ask HN"
